Changing market conditions cause more investors to pursue rental opportunities than fix-and-flip transactions, according to Fall 2025 RCN Capital Investor Sentiment Survey.
To download the full version of the Fall 2025 Investor Sentiment Survey, click here.
SOUTH WINDSOR, CT – November 5, 2025 – Real estate investor sentiment held steady in the third quarter of 2025 according to the Fall 2025 RCN Capital/CJ Patrick Company Investor Sentiment Index (ISI)™. The index fell by a single point from a score of 102 to 101, the sixth score of 100 plus in the 10 quarters since the ISI was first published in 2023, indicating a generally positive outlook by investors across the country. Despite this, the index was down by 23 points from the prior year, reflecting some of the challenges faced by investors in a lackluster housing market.
According to the Fall 2025 RCN Capital/CJ Patrick Company Investor Sentiment Index™, the percentage of investors who viewed today’s market as better or much better than it was a year ago declined from 49% in the previous quarter to 45%; those who viewed the market today as being the same as a year ago rose to 30% from 26%; while the percentage of those who felt market conditions had worsened fell from 25% to 24%. Investors were slightly more optimistic about where the market is headed over the next six months, with 48% expecting the market to improve, 33% expecting it to stay the same, and only 19% fearing it will decline.
While the Index score was essentially flat quarter over-quarter, previous Fall Index scores were 124 a year ago and 96 in 2023 indicating there doesn’t appear to be a purely seasonal trend in the scores. Two of the four metrics in the Index showed modest quarter-over-quarter declines: views on the future market dropped from 62 to 61points; and plans to buy properties in the next year fell from 35 to 32, as many investors indicated they’d be buying fewer homes in the next 12 months. Views on the current market remained the same with a score of 64. And investors continued to strongly believe home prices will appreciate, with an index score of 75, up three points from the prior report.
“Market conditions for real estate investors continue to prove challenging, with stubbornly high financing rates, rising labor and materials costs, and soaring insurance premiums taking a toll on investor profit margins” said RCN Capital CEO Jeffrey Tesch. “These higher costs have also made affordability a problem for homebuyers – especially first-time buyers – which weakens demand and limits opportunities for fix-and-flip transactions.”
Flippers Moving Towards Rental Investment Opportunities
Because of high home prices and relatively high mortgage rates, demand for owner-occupied properties has cooled off over the past few years. There were over six million existing homes sold in 2021. The number dropped to just over five million in 2022, declined further to four million in 2023 and 2024, and appears to be trending at roughly the same level this year. Over 24% of respondents to the Summer survey claimed that demand for owner-occupied homes has declined since mortgage rates spiked in mid-2022; another 21% said demand for rental properties had risen during the same period; and over 33% said they’d seen both trends in their markets.
Perhaps because of these changing market conditions, rental property investors comprised the largest group of respondents at 44%, followed by flippers at 38% and wholesalers at 17%. But digging below those topline numbers showed how market dynamics might be affecting investing strategies. While 34% of the respondents said they have stayed true to their primary type of investment - flipping, renting, or wholesaling - almost 55% said they've switched their primary model over the past few years, and another 11% said they've added a secondary form of investment. The switch has been much more prevalent among flippers than rental investors. Almost 52% of flippers have switched to a rental strategy, and another 8% have added rentals to their business.
Yet fix-and-flip investors continue to be more positive about market conditions than rental property investors. Almost 55% of flippers viewed market conditions as better than last year. Flippers were almost equally split between those who felt the market was the same and those who felt it had worsened with 24% each. On the other hand, less than 27% of rental property investors felt that market conditions had improved. Almost 42% believed there had been no change, and the remaining 31% felt that conditions were worse. These less positive views may be reflective of challenges facing the rental market today, where a massive increase in apartment units over the past two years has contributed to higher vacancy rates and declining increases in asking rents.
Flippers were also much more optimistic about future market conditions, with almost 61% expecting things to improve, while 22% felt things would stay the same and 17% fearing worse conditions. Over 46% of rental property investors expected conditions to remain the way they are, about 30% believed the market would improve, and the remaining 24% afraid that conditions would worsen
Both rental property and fix-and-flip investors agree that home prices will continue to rise: 32% believe prices will rise by more than 5%, and another 30% expect prices to increase by 5% or less. Exactly 25% expect prices to remain the same, while just 11% expect prices to fall.
Investors Change Purchase and Pricing Plans Due to Price Fluctuations
In some markets, home prices and asking rents have begun to decline, and investors have had to adjust their business models to compensate. Almost 29% of respondents said they've reduced the sales price or rental rates for their properties. Another 21% said they've scaled back their investing activity, while 22% said they haven't had to shift strategies, but expect that they will need to soon. On the other hand, 15% haven't made any changes, and don't believe they'll need to this year, and almost 10% said that prices are continuing to rise in their markets.
Declining - or more slowly appreciating - prices are of immediate concern to flippers, and the numbers reflect that: 50% said they'd had to reduce their sales prices, 18% said they expected an impact to their business model this year, and 15% said they had to scale back their investing activity. Just over 10% said they didn't expect price drops to impact their business or noted that prices were still rising in their regions.
Rental property investors have a longer time horizon, are less likely to be immediately affected by home values declining, and just over 10% said they'd had to reduce asking rents. But over 31% said that they anticipated having to do so in the months ahead, and 19% have scaled back their investing activity. Looking ahead, 24% said they anticipated no issues in the coming months, and 11% noted that prices continued to rise in their markets.
Investors Concerned About Insurance, Feeling the Impact of Trump Policies
The increasing costs or limited availability of insurance is top of mind for investors – over 77% of respondents say that insurance is a factor in their investment decision-making, and 64% claim that it has caused them to miss out on an opportunity to buy or sell an investment property. Just under 90% of flippers say that insurance costs or availability are major factors in their investment decisions, and over 80% say insurance issues have caused them to miss out on a deal.
Rental property investors are less concerned - possibly because fewer of them have missed out on an investment opportunity. Only 66% of rental investors claim that insurance issues are a major factor in their decision making, and 44% report that insurance matters have caused them to miss out on a deal.
This is one area where regionality probably comes into play. Flippers in Florida and California – are much more likely to cite insurance-related issues. 100% of the flippers surveyed from both states agreed that insurance issues were a major consideration in their investment decisions. And with good cause: 93% of California flippers and 89% of Florida flippers claim to have lost a deal due to these issues. Rental investors in those states are also much more concerned than their peers elsewhere. In Florida, 89% of rental investors include insurance issues in their decisions to invest, as do 79% of California rental investors.
The majority of investors also claimed that Trump Administration policies are having an impact on their businesses. Over 56% said that tariffs on goods imported from Canada, Mexico, and China were increasing their construction costs. Almost 37% said they'd seen a disruption in supply chains, and 34% said increased materials costs had reduced their profit margins. Almost 27%, however, claimed to have seen no impact to their business from tariffs.
Over 46% of respondents said that the Administration's deportation policies have made it more difficult for them to find labor. Just over 34% claim the policies have increased construction costs, and about 21% say they have fewer opportunities for home sales or rentals. But a large number of respondents - almost 38% - say they've seen no impact to their business operations.
High Cost of Financing, Rising Home Prices, and Limited Inventory Still Major Challenges
The high cost of financing continues to be the most frequently cited challenge by investors, as it has been since the inception of the survey, noted by nearly 70% of the respondents in this quarter’s report. Rising home prices (38%), lack of inventory (36%), competition from other investors (34%), and the rising cost of material and labor (28%) were the other challenges most frequently mentioned. Future challenges cited by investors in the survey were almost identical, although the percentages varied slightly: the high cost of financing, was cited by about 60% of the respondents; competition from other investors was next at 34%; followed by rising home prices at 33%; limited inventory at 32%; and rising material costs at 30%.
“Most of the challenges investors are concerned about directly affect an investor’s profit margin, and this is an issue most acutely felt by smaller investors, who make up over 90% of the residential real estate investment market” said Rick Sharga, CJ Patrick Company CEO. “Financial returns on property sales or rentals are critical for these investors, since 76% of them report that investment income is either their primary source of income or an important supplemental source of funds. Compressed margins can be the difference between a comfortable lifestyle and financial distress.”
To download the full version of the Fall 2025 Investor Sentiment Survey, click here or on the image below:
About RCN Capital
RCN Capital is a South Windsor, CT-based national, direct, private lender. Established in 2010, RCN provides investment loans for the purchase or refinance of non-owner-occupied residential properties. The company specializes in new construction financing, short-term fix & flip and bridge financing, and long-term rental financing for real estate investors. For more information on RCN Capital and RCN’s loan programs, visit www.RCNCapital.com.
About CJ Patrick Company
Founded in 2019, CJ Patrick Company is a Market Intelligence and Business Advisory firm working with companies in the real estate and mortgage industries. Visit www.cjpatrick.com for more information.
About the RCN Capital/CJ Patrick Investor Sentiment Index™ (ISI)
The RCN Capital/CJ Patrick Investor Sentiment Index™ (ISI) was designed to track the pulse of real estate investors across the country and gauge market outlook. The ISI is based on a quarterly survey of residential real estate investors and focuses on their responses to four specific questions:
More detailed methodology available upon request.
Contact:
Erica LaCentra
RCN Capital
(860) 432-4782
elacentra@rcncapital.com
Rick Sharga
CJ Patrick Company
(949) 322-4583
rick@cjpatrick.com